Stocks lurched higher after a back-and-forth session Thursday as investors apparently set aside some interest rate concerns and took a dose of upbeat economic data at face value.
The Philadelphia Federal Reserve said regional manufacturing in June has had its strongest growth since April 2005. The bank’s index of regional manufacturing activity jumped to 18 from 4.2 in May. But the report had little effect on the market although investors have been wary about any signs of economic strength that might lead the Federal Reserve to raise interest rates when its Open Market Committee meets next week.
Investors, looking for a reason to buy back into the market, briefly pushed away their rate concerns, even though the yield on the benchmark 10-year Treasury rose to 5.20 percent from 5.15 late Wednesday.
Oil, which had advanced amid concerns about a general strike in Nigeria, Africa’s largest crude oil producer, reversed course Thursday. Light, sweet crude fell 21 cents to $68.65 per barrel on the New York Mercantile Exchange after nearing $70 early Thursday.
“Things on a fundamental basis haven’t changed all that much. The market just gets excited one way or the other,” said Tom Higgins, chief economist at Payden & Rygel Investment Management, referring to even slight shifts, for example, in bond yields.
“Now that things have stabilized, although we’re at a higher level the market can move higher for the year, but there’s going to be higher volatility along the way.”
The Dow Jones industrial average rose 56.42, or 0.42 percent, to 13,545.84 after dropping 146 points Wednesday.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 9.35, or 0.62 percent, to 1,522.19 and the Nasdaq composite index advanced 17.00, or 0.65 percent, to 2,616.96.
The dollar was mixed against other major currencies, while gold prices fell.
Recent weeks have proven relatively volatile on Wall Street after months-long periods of generally steady advances. Comments this month from Fed Chairman Ben Bernanke and inflation concerns furthered the notion that the central bank wasn’t likely to cut interest rates this year as some observers had predicted and could possibly even raise rates.
Investor concerns sent the yield on the 10-year note above 5 percent this month for the first time since last summer. Subsequent spikes in yields, which move inversely to bond prices, have at times rattled stock markets. Since then, as yields receded stocks have logged sharp — if temporary — gains, such as those from the final three days of last week when the Dow surged more than 344 points.
Also Thursday, the American Stock Exchange resumed trading of stocks and exchange traded funds in the afternoon after the exchange resolved technical problems that had forced it to halt trading earlier in the day.
Among other economic data investors were considering was a weekly Labor Department report showing the number of workers seeking jobless benefits rose by 10,000 last week to a two-month high, marking the third straight weekly gain. While the increase wasn’t large, the movement could suggest unemployment isn’t quite as low as it had been. Wall Street might regard the report as good news, however, because overall unemployment remains quite low and wage inflation could result if employers have to fight for workers.
The Conference Board’s May index of leading economic indicators predicted the U.S. economy will expand modestly in the coming months.
The economic readings come amid a quiet week for news about the economy. There are also only a handful of quarterly results from companies. Corporate earnings reports will begin flowing in earnest in several weeks and Wall Street is accustomed to receiving profit forecasts around this time. Investors are hoping a parade of strong earnings might continue and provide adequate fodder to send stocks higher after a largely uninterrupted, 11-month rally.
“The market is kind of in a wait-and-see mode,” said J. Bryant Evans, a portfolio manager at Cozad Asset Management. “When we hear from the Fed again the market will probably move one way or the other.”
In corporate news, coffee chain Starbucks Corp. fell $1.06, or 3.9 percent, to $26.26 after warning that reaching the top end of its fiscal 2007 earnings forecast could prove challenging, in part because of high dairy costs.
H&R Block Inc. fell 74 cents, or 3.3 percent, to $22.04 after reporting it swung to a fourth-quarter loss amid continuing troubles in its mortgage lending arm. Difficulties there outweighed higher revenue from the company’s tax and financial-services businesses.
Eyewear maker Luxottica Group SpA rose $3.18, or 9.1 percent, to $38.02 after agreeing to acquire rival Oakley Inc. for $2.1 billion. Oakley jumped $3.22, or 13 percent, to $23.45.
Andersons Inc., an ethanol and grain producer, rose $5.10, or 13 percent, to $45.50 after the company raised its full-year profit forecast following a strong second-quarter performance from its agricultural businesses. The company also began producing ethanol from a second plant and has seen better-than-expected margins.
Advancing issues outpaced decliners by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to 3.10 billion shares, down from 3.22 billion Wednesday.
The Russell 2000 index of smaller companies rose 3.63, or 0.43 percent, to 839.81.
Overseas, Japan’s Nikkei stock average closed up 0.16 percent. Britain’s FTSE 100 fell 0.80 percent, Germany’s DAX index fell 1.55 percent, and France’s CAC-40 lost 1.04 percent.